In this post: Reasons you should run to read this book. Practical, actionable, and knowledgeable. A great introduction to investing, and why you should invest young and early. Still, practice a side eye with some sections.
Category: Money
Ramiah Recommended?
Yes! Similar to Why Didn't They Teach Me This in School? by Cary Siegel, Millionaire Teacher addresses the gap in students' financial literacy thanks to our wonderful education system. That 'wonderful' was sarcasm.
As I prepare to enter my first full-time post-college job, I'm working hard to ensure 1) I handle my money intelligently, and 2) I use money in ways that will make it work for me. Investing is a way to check both those boxes, and this book is a perfect one-stop-shop.
Unless you're a business major (and depending on your curriculum, even if you're a business major), you won't have direct lessons about investing - stocks, mutual funds, and the like. However, investing is such a crucial action for building wealth and planning for retirement. Anyone seeking to increase their net worth and generational wealth (and address racial wealth gaps, like me) should at least be mildly versed in investing. Without much prior exposure to the field, it can be overwhelming to dip your feet in and get a basic grasp of how it works and how you should begin. Start with this book.
Hallam does an excellent job of breaking down what stocks are, what bonds mean, how compound interest works, and more. The book also has so much practical financial advice - such as paying off debt first, buying and selling used cars, and saving aggressively - that sets a foundation for the investing principles.
Hallam knows what he's talking about, too; he draws upon numerous studies from Duke University to The Wall Street Journal to substantiate what he's saying. Hallam's a prolific writer in the accredited MoneySense magazine, a debt-free millionaire since his 30s, and a disciple of Warren Buffet. That's more than enough reason for me to implement what Hallam recommends.
What makes this book different from other money books I have read thus far (which, to be honest, isn't that many yet... but I'm working on it!) is its context and approach. This book isn't from the rich to the rich. As the title suggests, it's for people of low to middle incomes to become wealthy. Hallam defines a wealthy person as someone having enough money to never work again out of necessity, and the possession of investments that provide twice the level of their country's median household income over a lifetime (pg 4).
The principles work best when you act on them as early as you can, which also usually corresponds with when you don't have much financially. The actionable advice I mentioned earlier includes links to current and accredited institutions (i.e. the nonprofit Vanguard), strategies that range from checking your portfolio every month to once a year, and no-no's to be wary of (like financial advisors and actively managed mutual funds).
Despite all this, I did have moments of skepticism...
The edition I read was written in the early 2010s and recommended not investing in tech stocks. As we know now, tech companies like Google and Facebook make up some of the biggest and most profitable companies in the world. It's hard to imagine tech going away, but that is how I interpreted his stance to avoid tech stocks due to their unpredictability and volatility. Some tech companies are indeed those things, but to cast out the entire industry? Maybe his view on this changed in the second edition written in 2017.
There's also a personal story about an actively managed mutual fund employee who basically divulges to Hallam how and why her fund gives poor financial advice to people. I find that pretty hard to believe, but I am giving him benefit of the doubt because some people do reckless things and the rest of this book is credible.
Overall, you cannot go wrong with Millionaire Teacher. It's so easy to understand, tangible with its advice, extremely educational through references to existing research, and humorous. For example, while warning about 'market timing' (when people think they can predict the rise or fall of the market, and therefore, when to buy or sell their stocks), he wrote: "Most financial advisers have a better chance beating Roger Federer in a tennis match than effectively timing the market for your account" (pgs 64-65). If that doesn't convince you to read this book, I don't know what will.
Ramiah Reflects
My New Favorite (Financial) Life Quotes:
"Instead of looking where you think the grass is greener, admire your own yard" - Andrew Hallam
"Image is nothing if you lose your job, can't make your car payments, or if you're stuck having to work until you're 80 years old" - Andrew Hallam
"If the interest rate doubled, could you still afford to make the payment?" - Andrew Hallam's mother
"Invest early, and invest frequently" - Andrew Hallam
"If you can learn to invest regularly in indexes and remain calm when the markets fly upward or downward, you'll grow far wealthier [than those who don't]" - Andrew Hallam
"It's not timing the market that matters; it's time in the market" - Andrew Hallam
"Greed might be the greatest hallucinogenic known to man" - Andrew Hallam
"[Real investors] care more about what the markets will be doing in 20 years not next week" - Andrew Hallam
"If you don't intimately understand the business, it's important that you don't buy the stock" - Andrew Hallam
Questions to Ask Yourself (and answer!):
Do you know what you spend money on each day? Is it active knowledge (writing it down) or passive knowledge (making purchases)?
What are you investing in right now? How balanced is your portfolio between stocks and bonds?
Are you saving for your retirement? How? Are the accounts taxable or tax-advantaged?
Food for Thought:
"With just three index funds, your money can be spread over nearly every available global money basket: 1) A home country stock market index (for Americans, this would be a U.S. index, 2) An international stock market index (holding the widest array of international stocks from around the world), 3) A government bond market index (money you would lend to a government for a guaranteed stable rate of interest)." (pg 35)
"Don't listen to Wall Street, don't read financial newspapers, and don't watch stock market-based news. If you rebalance a portfolio like this just once a year, you'll beat 90 percent of investment professionals over time," (pg 103)
"Look at price-earnings ratios before buying individual stocks," (pg 161)
"Look at profit growth for companies before buying individual stocks," (pg 165)
"Invest in private stocks of companies whose top executives are shareholders themselves - they are more likely to take shareholder's interests to heart. (i.e. Netflix, Papa John's, etc.)," (pg 171)
Ramiah's Re-read When
Re-read when:
You need a reminder (several, actually) to live below your means
You need a reminder that image isn't everything and you shouldn't keep up with the Joneses
You need a reminder to not trust the money management industry/financial advisors
You need a reminder to choose index funds over actively managed mutual funds (many reminders, honestly)
You need a reminder to stay in the market, obviously when there are highs but especially when there are lows
You need a reminder to not rely on the historical performance of funds
You need a reminder that the future of the stock market cannot be predicted
You want practical strategies for investing and rebalancing your portfolio once a month or once a year
You are car hunting and you want a durable car that you can resale for equal or higher value
You are preparing to teach money to your children
You need a breakdown of how stocks and actively managed mutual funds work
You want charts on the math of investing, saving money, and buying into index funds
You want to read case studies about investing
You need a refresher to distinguish between stock price and earnings per share
You need a reminder to not be seduced by investing tropes and dangers
You are preparing to purchase individual stocks
See below for my book notes.
Note: I plan to do a review of the second edition later.
Check out my other posts and book notes here.
Until next time!
Montana Houston
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